Mortgage Loan Modifications: Tips to Get Approved

Home Loan

Finding out just how a loan modification works could help you to stop foreclosure quick. You may be in danger of having your home foreclosed upon and are in search of foreclosure solutions. If this sounds like you then please continue reading this article; the information enclosed could save your family home from the auction block.

This article will give you helpful tips that you can use to pay for your mortgage without the strain that would have come with it. Basically, there are two things that can make your mortgage fee more affordable. One is by lowering the interest rates chargeable and secondly, lengthening the repayment period so that the installments become smaller but payable over a longer period of time. Both of these two remedies will lead to a significant reduction of the premium after the modification process.

First, there needs to be a national legal shield that allows servicers to modify loans without concerns about liability to their investors as long as they are fulfilling their fiduciary responsibility to the investor to maximize the value of the asset. This needs to be combined with incentives for the servicers to take that action quickly. That is already in place with regard to certain subprime loans due to loan modification guidelines published last year by the Securitization Forum. Those guidelines need to be universal, and widely promulgated. Secondly, the “moral hazard” argument needs to be completely debunked. It’s time for solutions, not blame. There is plenty of blame for everyone. The “moral hazard” argument says that if home owners are given a break it will encourage inappropriate risk taking by other homeowners in the future. This easily dealt with through realistic underwriting guidelines which are certain to be imposed by the market as long as investors are clear that the government will not bail them out. Fortunately, that is already occurring.

Mortgage loan modifications can help qualified homeowners to keep their families safe and secure in the home they’ve grown accustomed to and can also be one of the safest foreclosure solutions available to borrowers in danger of losing their homes. How does a loan modification work? Here are the basic guidelines: Primary residences may be eligible for a lower payment under federal guidelines.

Homeowners behind in their monthly payments may be eligible. Home owners facing financial hardship due to loss of income and increased expenses may be eligible.

Mortgage payments can be modified by reducing the interest rate, extending the loan term or forgiving or deferring some of the principal balance.

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